eHealth Inc.’s 3rd Quarter 2021 – MA approved policies down 18%, MA LTV up 9%
Telos Actuarial recently compiled key information on eHealth Inc.’s (NASDAQ: EHTH) 3rd Quarter Financial results.
One of the key metrics reported by eHealth on a quarterly basis is constrained Lifetime Value (“LTV”) per approved policy. LTV is the estimated amount of commissions the company expects to receive over the life of the policy, per approved policy. MA LTV increased 9% in 3rd quarter 2021 when compared to 3rd quarter 2020.
*Estimated based on year-end results
eHealth’s LTV decreased for Medicare Supplement “MS” and Prescription Drug Plans “PDP” when compared to the same quarter last year. However, LTV Medicare Advantage “MA” and their ACA and Ancillary lines all increased.
A decrease in LTV is most likely driven by a combination of the following:
Lower % of approved policies becoming paying members
Change in mix of business resulting in lower commission rates
Change in constraint being applied
Higher lapse rates (resulting in shorter average life per policy)
eHealth’s commentary on LTV mentions that the decrease in Medicare Supplement and PDP was due to “shorter average plan durations” (i.e. higher lapse rates). Conversely, the increase in LTV for ACA, Ancillary and Small Business was due to “increased estimates of average plan duration” (i.e. lower lapse rates).
eHealth attributes the Medicare Advantage LTV increase to higher commission rates. This may be due to selling a higher portion of policies through internal agents vs. external agents as they’ve shifted telesales strategy recently (see more details in the last paragraph below).
Another key metric reported by eHealth is approved policy counts. Overall approved policy counts decreased 15% when compared to the same quarter last year.
*Estimated based on year-end results
The decrease in approved policy counts was largely driven by a decrease in Medicare Advantage, offset somewhat by an increase in ACA plans.
eHealth implies that the drop in approved policies is due to “operational changes” that are geared toward enrollment quality. In the near term these changes have resulted in lower conversion rates. As part of this, eHealth mentions pivoting to “full-time, internal salesforce with internal agents” which now represents 95% of total compared to 50% at the same time last year.
Source data: eHealth Inc.’s quarterly Form 10-Q (https://ir.ehealthinsurance.com/financial-information/sec-filings)
eHealth Inc’s quarterly investor presentation (https://ir.ehealthinsurance.com/events/event-details/q3-2021-ehealth-inc-earnings-conference-call)
Telos Actuarial helps distributors maximize the lifetime value (“LTV”) of their commissions by providing persistency analysis, industry lapse and persistency reports, projected commission cash flow analysis, and LTV calculations. Send us an email for more information. info@telosactuarial.com
